PRESENTATION OF THIRD QUARTER OCTOBER 2015

Transcription

1 PRESENTATION OF THIRD QUARTER OCTOBER 2015

2 THIRD QUARTER 2015 SUMMARY CONSIDERATIONS OPERATING COMPANIES PERFORMANCE Millicom organic revenue growth of 7% in local currency (excluding UNE), Tele2 mobile end-user service revenue growth of 5% Zalando s preliminary third quarter revenues grew 41-43% with an EBIT margin of -2.5 to -4.5% Global Fashion Group announced net sales growth during the first half-year of 63% KINNEVIK INVESTMENT ACTIVITY Net investments focused on existing companies, amounting to SEK 375m whereof, as announced in the previous quarter: - SEK 173m into Global Fashion Group - SEK 171m into Quikr Net investment of SEK 864m for the first nine months and guidance of SEK 1.0bn to bn for the full year 2015 Kinnevik has entered into an agreement to sell its entire 31% stake in Avito to its co-shareholder Naspers for a total consideration of USD 831m (SEK 7.1bn at the 30 September 2015 exchange rate). Closing of the transaction is conditional upon relevant consents from anti-trust authorities and the South African Reserve Bank KINNEVIK FINANCIAL POSITION (QUARTER END AND AS AT 22 OCTOBER 2015) Net Asset Value of SEK 82.1bn or SEK 296 per share, down by SEK 5.2bn in the quarter driven by a SEK 7.7bn decrease in the value of our listed investee companies and a SEK 2.6bn increase in the value of our unlisted investee companies NAV of SEK 81.4bn or SEK 293 per share per 22 October 2015 Strong balance sheet with net cash of SEK 34m excluding cash in operating subsidiaries 2

3 NET ASSET VALUE: DOWN 6% IN THE THIRD QUARTER NAV by segment (SEKbn) Financial Services & Other Entertainment Communication NAV Per Share (SEK) E-commerce & Marketplaces Net Cash % Share of GAV % 51% ( 3.3) Down 14% q/q with peer group EV/EBITDA multiples down 6% ( 2.0) Down 16% q/q with peer group EV/EBITDA multiples down 8% ( 0.0) Peer EV/Sales multiple down 10% q/q offset by strong sales growth ( 2.1) ( 0.2) 2.9 ( 0.4) -6% % % % % % 46.4 Q Millicom Tele2 Zalando Rocket Other listed assets Unlisted assets Change in net cash 1 Q Excluding cash in operating subsidiaries. 3

4 SECTION A Q OPERATING COMPANIES PERFORMANCE

5 PUBLIC COMPANIES: COMMUNICATION, ENTERTAINMENT & E-COMMERCE MILLICOM Organic revenue growth of 7% in local currencies excluding UNE -2% in reporting currency due to increased currency volatility across many key markets EBITDA margin amounted to 34% in the third quarter vs. 33% in the same period last year Millicom reached the target of 60 million mobile customers in the third quarter, adding 4 million Cable footprint increases by 243,000 to 7.5m, an increase of 8% with RGUs growing 6% year on year to 5.3m TELE2 Organic revenue growth of 3% (2% in local currencies) Mobile end-user service revenue growing 5% EBITDA margin of 24% vs. 26% in the same period last year negatively impacted by decline in fixed operations and accelerated Netherland launch Sweden mobile EBITDA 2nd highest ever quarter with 34% margin Strong EBITDA development in Kazakhstan MTG MTG reported net sales growth of 5% at constant FX rates in the third quarter EBIT margin before non-recurring items up 9% Y/Y As reported already in the second quarter, MTG invested SEK 1.2bn in three digital businesses and extended its international sports rights in the third quarter In September, CTC Media announced that it had entered into a definitive agreement to sell a 75% interest in its operating businesses for USD 200m in cash QLIRO GROUP Net Sales in line with last year EBITDA margin of -1.6% vs. 0.7% in the same period last year Key operational initiatives and investments finalized in the third quarter: i.e. consolidation of CDON s warehouse, strengthening of the management team and reorganisation of Gymgrossisten Qliro Financial Services developing well, handled over 2.4 million transactions from over one million unique customers, and business volumes exceed SEK 1.9bn since launch ZALANDO Increased investments and strong growth in Q3 Preliminary numbers show further acceleration of growth to 41-43%, Q3 revenues at EUR million Adjusted EBIT of EUR -18 to -32 million (margin of -2.5 to -4.5%), including targeted growth investments Accelerated profitable growth: revenue growth guidance for FY 2015 raised to 33-35%; in return, adjusted EBIT margin lowered to 3-4% for full year ROCKET INTERNET Significant valuation uplift in existing companies resulted in a 24% increase in Rocket s share of LPV during the quarter Rocket s Global Online Takeaway Group displayed strong financial performance. HelloFresh raised funding at a valuation of EUR 2.6bn, an increase from the previous round of almost EUR 2bn Rocket has launched nine new businesses year to date 5

6 Q OPERATING RESULTS FOR SELECTED PUBLIC COMPANIES Reported Revenue (SEKbn) Q Q ,3 Millicom Tele2 MTG Qliro Zalando Organic Growth Y/Y: 7% 2% 3% 0% 41-43% Margin: Q3 14 Q3 15 EBITDA 33% 34% Q3 14 Q3 15 EBITDA 26% 24% Q3 14 Q3 15 EBIT 3 6% 6% Q3 14 Q3 15 EBITDA 0.7% (1.6)% Q3 14 Q3 15 EBIT 4 0.8% (2.5)-(4.5)% 1 Average exchange quarter to date as at 30 September applied in conversion of non-sek revenues. Millicom revenue includes UNE, organic growth in local currency. 2 Excluding non-recurring items. 3 Based on preliminary figures. 4 EBIT adjusted for share-based compensation 6

7 ZALANDO IS CONTINUING TO GROW STRONGLY AND HAS INCREASED ITS GROWTH GUIDANCE FOR 2015 TO ~33-35% EBIT margin 1 Sales EURm % % +24% 10% 8% % 4% 200 2% (100) (200) 0% (2%) (4%) (300) (400) (500) (600) (700) (6%) (8%) (10%) (12%) (800) (900) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q (14%) Revenue growth guidance raised to 33-35% (up from 28-31%); in return, adjusted EBIT margin 1 lowered to 3-4% for full year (down from 4.5%) 1 EBIT adjusted for share based compensation Source: Company information. Guidance updated

8 GLOBAL FASHION GROUP CONTINUED STRONG GROWTH Y/Y PERFORMANCE IN THE FIRST HALF OF THE YEAR LEADING THE WAY IN MOBILE COMMERCE Total orders (m) % m app downloads across the group Namshi ios app is #1 lifestyle app in Saudi Arabia Brazilian ios app ranked among Apple s Best of 2014 apps Active customers (m) % 6.9 Mobile share doubled over the last twelve months with up to 80% of revenues in select markets Conversion rate up to 2x higher on mobile than desktop GMV (EURm) % 679 BUILDING A MARKETPLACE FOR BRANDS AND SELLERS Marketplace % of NMV for Zalora Net sales (EURm) % 418 Q Q Q Sep 2015 Gross profit (EURm) 2 79 H % Source: Respective companies unaudited consolidated financial statements based on IFRS and management reports, Rocket Internet CMD 30 September Excluding Jabong 2 Local currencies converted to EUR using 1-Jan Jun-15 average FX rates: EUR/BRL = 3.31, EUR/RUB = 64.60, EUR/INR = 70.19, EUR/AED = H Acceleration of marketplace share, to over 10% in Southeast Asia, with up to 30% in select markets Zalora s assortment more than doubled YTD as a result of marketplace push, reaching approx. 200k SKUs Roll out plan across all regions in the next quarters 8

9 GLOBAL FASHION GROUP ASSORTMENT STRATEGY PARTNERSHIPS WITH INTERNATIONAL BRANDS GFG offers a unique growth opportunity for international brands with reach across 28 attractive emerging markets Case study: GFG as unique online retailer in its markets for Arcadia s brands PRIVATE LABEL GFG is building a private label business with Focus on unit economics, leveraging high-margin products with toptier sell through and significant economies of scale Trendy, competitive and desirable fast fashion, with appealing pricequality ratio and localised and seasonal collections Operational excellence in sourcing, design, manufacturing and distribution, with access to top supplier bases and completely inhouse design team Dafiti Dorothy Perkins TOPSHOP TOPMAN MISS SELFRIDGE Lamoda Namshi Jabong Zalora For Zalora, private label has been a success story: Private label contributes approx. one-third of Zalora s sales volume with over 150% Y/Y growth The team has unique expertise and proven track record over the last three years Zalora has developed an established and scalable infrastructure Present in all countries Present in select countries Source: Rocket Internet CMD 30 September

10 RECENT ROCKET INTERNET ACTIVITY HELLOFRESH CASE STUDY NEW LAUNCHES HelloFresh is a global leader in fresh food subscription with 4.4m meals/month across 7 countries Weekly deliveries of portioned fresh ingredients and recipes for 3-5 meals per week Proven business model with attractive unit economics and predictable consumer behaviour Industry-leading technology platform enables cost leadership and scalability USD 6.5tn market with less than 1% online penetration provides significant opportunity for disruption drivejoy Value-added local P2P car-rental platform available in London, Berlin, and other major European cities Hyperlocal classifieds app in Pakistan Curated marketplace for corporate catering services in London FINANCING ROUNDS Net revenues (EURm) 408% Active subscribers (k) 429% H H Source: Rocket Internet press releases, CMD 30 September 2015 Raised EUR 75m from Baillie Gifford at EUR 2.6bn valuation Rocket stake valued at EUR 1.5bn Leading general merchandise e-commerce in Asian frontier markets Raised EUR 50m from CDC and APACIG Beauty and wellness service marketplace in Brazil, UK, France, Italy, UAE and Australia Raised EUR 15m from Rocket and others Food delivery in Europe Raised EUR 10m from Rocket, Eight Roads Ventures, DN Capital and Piton Capital 10

11 SECTION B INVESTMENT ACTIVITIES

12 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 HIGH ACTIVITY AND RAPIDLY INCREASING VALUATIONS IN THE VC MARKET GLOBAL VENTURE CAPITAL FINANCING ACTIVITY -24% -21% -3% 5% 16% 1% 3% 30% 57% 94% 70% 95% 55% 48% 83% bn 38bn 28bn 27bn 23bn 21bn 16 10bn 12bn 12bn 11bn 11bn 12bn 12bn 14bn 18bn Investments (USDbn) New Unicorns per Quarter % Y/Y Investments Growth (%) Source: KPMG & CB Insights Q Global Analysis of Venture Funding. Unicorn refers to private companies valued at USD 1bn and above founded post

13 HAS LEAD TO KINNEVIK FOCUSING ITS INVESTMENT ACTIVITIES ON ITS EXISTING COMPANIES INVESTMENT SEKM COMMENTS Saltside 41 Quikr 517 In January 2015, Kinnevik invested USD 5m in a USD 40m growth capital funding round alongside new investors Hillhouse Capital and The Frontier Fund In April 2015, Kinnevik announced that it had made a USD 40m (SEK 346m) investment as part of a founding round of USD 150m In July 2015, Kinnevik made a further USD 20m (SEK 171m) investment in Quikr as part of a secondary share purchase Kinnevik then became the largest shareholder in Quikr Westwing 186 In March 2015 Kinnevik participated with EUR 20m in a EUR 30m funding round GFG 555 In July 2015 Kinnevik announced it was leading a EUR 150m internal financing round in GFG with a EUR 59m participation BIMA 129 In June 2015, Kinnevik committed to invest USD 16m as part of an USD 38m internal funding round Other 101 Other minor investments during the year Gross Investments DIVESTMENT SEKM Transcom 580 In March 2015, Kinnevik sold 6.4 million shares to Altor for a total consideration of SEK 421m Kinnevik divested its remaining 1.9 million shares through block trade, corresponding to 7.4% of the outstanding shares for a total consideration of SEK 159m. The average price was SEK 84 per share or approx. 27% premium to the transaction with Altor Foodpanda 80 Kinnevik sold its stake in Foodpanda to Rocket Internet for a total consideration of EUR 9m Other 5 Other minor divestments during the year Gross Divestments 665 Net Investment

14 FOCUSED DEPLOYMENT OF CAPITAL IN LINE WITH STRATEGY 31 December December September 2015 Number of investee companies Value-weighted Kinnevik stake in select companies 1 20% 23% 23% Share of investments 95% into existing companies 95% 75% 100% FULL-YEAR FULL-YEAR YEAR TO DATE 1 Global Fashion Group, Lazada, Linio, Home24, Westwing, Konga and Quikr. 14

15 KINNEVIK SELLS ITS 31% STAKE IN AVITO TO NASPERS FOR A TOTAL CONSIDERATION OF SEK 7BN HISTORY OF THE KINNEVIK-AVITO INVESTMENT 2007: Creation of Avito Kinnevik partnered with Vostok Nafta, Filip Engelbert and Jonas Nordlander to found, seed and build Avito 2011: Diversification of investor base Introduction of other leading investors Northzone, Accel and Baring Vostok to support growth 2013: Local market consolidation Merger with Naspers controlled competitor Slando/OLX Kinnevik remains largest shareholder and retains chairmanship 2015: Emergence of a global leader in classifieds Growth and strong profitability Vertical leadership and product innovation Shift to mobile Enhanced governance with appointment of nonexecutive director Today: Further consolidation / exit Kinnevik supports global classifieds consolidation at a premium valuation ATTRACTIVE RETURN TO KINNEVIK (SEKm) 438 Invested Capital 6.6x NAV Q x % IRR Sale proceeds Equity value of USD 2.7bn and enterprise value of 32.3x 2014 net sales and 63.6x 2014 EBITDA 1 Proceeds to Kinnevik of SEK 7,087m will deliver a SEK 4,185m uplift to recorded fair value as of Q and a SEK 6,649m gain on total investment of SEK 438m The sale proceeds represent 16.2x Kinnevik s invested capital and an IRR of 77% Closing of the transaction is conditional upon relevant consents from anti-trust authorities and the South African Reserve Bank 1 Current cash position adjusted for warrant exercise, 2014 full year Net Sales and EBITDA translated at FX rates from 31 December

16 SECTION C KINNEVIK FINANCIAL POSITION

17 CAPITAL MARKET TRENDS IMPACTING THE PORTFOLIO VALUE PRICE DEVELOPMENT FOR LISTED PEERS Q CURRENCY TRADING Q (VS SEK) % % Q/Q 125% +2% Q/Q 125-5% Q/Q -1% Q/Q +2% Q/Q 100% -2% Q/Q % Q/Q 75-22% Q/Q -17% Q/Q 75% -22% Q/Q -13% Q/Q 50 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Fashion Home & Living Marketplace 50% Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 EUR BRL RUB INR NGN USD Inventory Classifieds Peers: Groups of comparable listed companies applied in Kinnevik s assessments of fair value of unlisted assets. Equally-weighted share price development with index value 100 per end of September Source: FactSet, Riksbanken, Kinnevik analysis. 17

18 PRIVATE ASSETS UP 17% MAINLY DRIVEN BY AVITO TRANSACTION Development of Private assets (SEKbn) Financial Services & Other Entertainment E-commerce & Marketplaces NAV Per Share (SEK) % ( 1.5) ( 1.9) Q Operational performance Operating FX Multiples / Market impact Kinnevik investment Avito Other 1 Q Includes adjustment for increased valuation of Kanui and Tricae, liquidation preferences, book value FX etc. 18

19 INCREASE IN FAIR VALUE OF PRIVATE ASSETS DRIVEN BY QUIKR, AVITO AND BAYPORT Investment (SEKm) Kinnevik Ownership Acc. Net Invested Fair Value Q Net Investments Q Change in Fair Value Q Fair Value Q Latest Transaction Value (LTV) Fair Value vs LTV Global Fashion Group 1, 2, 3 26% Home & Living Home % Westwing 3 17% Other Mixed Other e-commerce Lazada 1 9% Linio 1, 3 9% Konga 34% Other 1, 2 Mixed Marketplaces Avito 31% Quikr 21% Saltside 61% Wimdu 3 27% Other Mixed Other non-disclosed LTVs Total E-commerce & Marketplaces Iroko 17% Other Mixed Total Entertainment Bayport 24% Milvik/Bima 39% Rolnyvik 100% Other Mixed Total Financial Services & Other Total Unlisted Investments Accumulated net invested amount and comparable periods have been adjusted pro forma for transactions related to the merger of Global Fashion Group and the sale of Kanui and Tricae to Global Fashion Group 2 Accumulated net invested amount includes value of share distributions received from Rocket Internet 3 Ownership not adjusted for employee stock option plans and employee equity at subsidiary level 4 Including change in fair value and dividends received relating to subsidiaries that are consolidated into the group s financial statements 19

20 INVESTMENT ACTIVITY & FINANCIAL POSITION Q INVESTMENT ACTIVITY Q3 (SEKM) 2 FINANCIAL POSITION 3 (SEKM) Investments GFG Quikr -171 Other Total -375 Net Cash (30 June 2015) 482 Net Investments Operating Expenses -43 Other cash flow from operations -10 Net Financial Expenses -8 Net Cash (30 September 2015) 34 Divestments Total 0 Net Investment Activity, Q3 375 Net Investment Activity, Jan-Sep Increase in participation of GFG funding from Q Not paid in Q Whereof SEK25m not paid in Q Excluding operating subsidiaries 4 Cash outflow of SEK 531m (including fx impact) and reduction of unpaid investments of SEK 144m 20

21 SECTION D CONCLUDING REMARKS

22 SIX OF OUR TOP BRANDS REACH ~230 MILLION CUSTOMERS Delivering mobile services to Delivering mobile services to Delivering fashion online to Delivering goods online to Delivering TV channels to 60 million customers 13 million customers 16 million customers 6 million customers 138 million customers in in in in in 18 markets in Africa and Latin America 8 markets in Europe and Kazakhstan 15 markets in Europe 6 markets in South East Asia 140 markets around the world Customer Growth Y/Y: 12% 10% 20% 304% 6% Note: Active customers, Tigo, Tele2 and Viasat numbers from Q and Zalando and Lazada from Q Source: Company websites 22

23 WE CONTINUE TO PROGRESS TOWARDS ACHIEVING OUR STRATEGIC OBJECTIVES Build a select number of leading digital consumer brands Implement operational excellence within existing investee companies Create value through consolidation Develop strong strategic and operational partnerships Maintain balanced presence across regions and focus on extending the franchise Attract other leading International institutional investors Build a unique new business building and investing pipeline Progress in transforming Kinnevik into a value creating entrepreneurial investment group Crystallize the value of our investments Maintain a strong balance sheet and broad investor base 23

24 DESPITE RECENT MARKET TURBULENCE WE ARE DELIVERING ON OUR RETURN TARGET Five years CAGRs: NAV: +10%, Share Price +11% and TSR +15% NAV/share (SEK) Kinnevik B share price OMXS30 (rebased) Source: FactSet as at 30 September